Bits, Broadcasts & Bandwidth: Weekly Investment Grade TMT Review

Research evidence excerpt

Bits, Broadcasts & Bandwidth: Weekly Investment Grade TMT Review

d we view T spreads as more attractive than peers

TMUS and VZ.

• BT Group (BRITEL): met guidance and reaffirmed its medium-term targets as

record fiber deployment, customer growth and cost transformation drove EBITDA

growth despite legacy voice declines, inflation and a competitive broadband market.

Management reiterated normalized FCF of £2bn in FY27 and £3bn by FY30,

supported by lower capital spending as the fiber build peaks, continued EBITDA

growth and AI-driven productivity initiatives. Capital allocation remains focused on

full fiber, 5G and network modernization, followed by pension obligations and

maintaining a strong balance sheet with a through-cycle BBB+ ratings target, with

excess cash flow available for higher shareholder distributions. Management also

expects leverage to decline as capital spending falls, with no changes to funding

plans or debt issuance. BT acknowledged macro and geopolitical uncertainty,

including higher energy prices and cost of living pressures, but pointed to energy

hedging, operational efficiencies and AI as support for long-term growth.

• Cellnex (CLNXSM): Bloomberg reported Thursday that Cellnex is evaluating

strategic options as it looks for ways to grapple with its debt and weak share price.

Some of these possibilities could include a take-private of the company or a merger

with a competitor. The report said that, in the past year, Cellnex has held early talks

with an investor group backed by DigitalBridge and DT about the possibility of a

deal, and the consortium was considering the idea of a tie-up that would ultimately

combine Cellnex with DT’s infrastructure affiliate GD Towers, though the talks

reportedly didn’t progress past the initial stage.